The one-year plan: Law firm leaders focus on flexibility, innovation, talent and AI to shape the next era of legal practice

November 19, 2024

Prestigious law firm leaders and industry experts gathered once again for Sandpiper Partners’ 17^th Annual Global Law Firm Leaders Conference in London. Speakers representing top law firms from around the world, major clients, and industry consultants gathered to provide insights into client expectations for the next year, leadership in times of disruption, global market trends, the competitive war for talent, and the opportunities and risks of Artificial Intelligence (AI) in law.

Here are the top four takeaways from the event:

Law firms need to be more “client-shaped” to deliver transformative value to their clients

Law firms must deeply understand their clients’ strategies and priorities to be successful partners. As one panelist and senior leader from a major international bank, and a significant client for law firms, explained: “The most valuable law firms for us are those that truly understand the holistic strategy and priorities of our organization. They are able to help us navigate complex deals and transactions by proactively horizon scanning and identifying issues or opportunities before we even realize them ourselves.” A managing director from another global investment bank echoed this, stating: “The law firms that invest the time to build meaningful relationships with us, and then proactively reach out with valuable insights, are the most powerful and valuable partners for our organization.” This requires law firms to be truly “client-shaped,” as one former law firm partner described – not just organized around internal practice areas but structured to provide team continuity and integrated expertise across the firm to meet their clients’ evolving needs. Those law firms that develop this “close ear” to their clients will be the most successful long-term partners.

Clients are also continuously reviewing the commitment to diversity, equity and inclusion (DE&I) from the law firms they work with. As an investment bank representative on the panel shared, “Our organization has appointed dedicated relationship managers to meet with our law firms annually, with a specific focus on reviewing the firms’ progress and efforts around DE&I. This shows that we, as clients, are increasingly expecting law firms to walk the talk on DE&I, not just as a box-ticking exercise, but as a core part of the client relationship.” Firms that can’t show authentic DE&I efforts risk losing credibility and trust with clients.

Law firm leaders need to develop a proactive response framework to successfully navigate market disruption and turbulence

Law firm leaders are grappling with significant disruption and challenges to their traditional business models, requiring a new approach to strategy and talent management. “We are always living in interesting times and as we know, that is more of a curse than a blessing,” said one of the speakers, also a senior leader at a top international law firm. One of the key disruptive forces is how the UK and European legal market is having to “dance to the tune” set by the much larger and more powerful US legal market. Many UK and European law firms feel compelled to match the compensation levels set by the larger US firms, even though this business model may not be sustainable locally. “The US controls 48% of the world’s global legal spend,” said the same speaker. “We are nowhere near that… the London market is much thinner than the New York market, yet the New York market is dictating how we behave, and how we must remunerate our junior lawyers. This is a challenge, and the clients know that it’s a challenge. We have got serious headwinds in in terms of the acceptability of our business model.” This pressure to attract and retain the best lawyers is leading to larger compensation packages that are drawing scrutiny, impacting law firm profitability, and also straining the wellbeing of lawyers themselves due to the immense billable hour requirements that the high salary commands.

In response, law firm leaders are rethinking their growth strategies and talent models. A senior partner at another global firm described their approach as “a one-year plan,” working closely with each partner to understand and support their individual growth plans, rather than imposing a rigid long-term strategy. This flexibility and focus on sustainable profitability over rapid expansion appears to be a key differentiator.

The panelists also agreed on the importance of having a structured framework for responding to unanticipated events and disruption, rather than just reacting. As one senior partner and panelist emphasized, “It’s coming up with a matrix, a structure that you can run with. Obviously unanticipated events mean that you can’t have a cookie cutter response. But it’s worthwhile asking yourself a number of questions. How do we respond without getting embroiled in political discourse? What are the thresholds for responding, and what are the criteria driving how you respond?” The key idea is that law firm leaders need to have a proactive framework in place to guide their response to disruptive events and challenges, rather than just reacting in the moment. This allows them to respond in a thoughtful, principled way that aligns with the firm’s values and priorities.

Professional teams can help take some of the heat off lawyers and boost client relationships

In the face of intense competition, pressure on lawyers’ wellbeing and evolving client demands, law firm leaders are recognizing the untapped potential of their business support services teams to enhance client relationships. As one panelist and senior law firm leader observed, “We often forget that client relationships don’t always have to be fronted by lawyers.”

By strategically leveraging their business professionals and support teams, law firms can take the pressure off lawyers to handle administrative “hygiene” tasks, allowing them to focus on delivering high-value, strategic advice. As the panelist explained, “Think about what your business services team can do to take away some of the heat – how much that would be appreciated by clients. Business services teams have got a lot to bring to client relationships.” Too often, these essential administrative responsibilities fall solely on the shoulders of lawyers, distracting them from their core role as trusted advisors. However, empowering business professionals to own these tasks can significantly improve the client experience and free up lawyers to invest more time in understanding the client’s business, anticipating their needs, and providing transformative value. Aligning these support functions with the firm’s client-centric objectives can help lawyers strengthen their client relationships, enhance efficiency, and position their firms for long-term success.

Law firms must proactively manage the risks and opportunities of generative AI

As generative AI tools such as Microsoft Copilot and ChatGPT continue captivating the legal industry, law firms must take a proactive approach to navigating the regulatory challenges and maximizing the benefits. Speakers on the panel agreed that law firms must have robust systems as well as effective governance and supervision arrangements in place to ensure the ethical and compliant use of generative AI. A telling statistic from a panelist from a leading consultancy firm, revealed that according to a recent study from Microsoft and LinkedIn, “78% of people are actually bringing some form of their own AI tools to work.”[1] This rapid adoption underscores the need for firms to proactively manage the integration of these tools, providing training while also fostering a culture of experimentation. Another panelist, a senior leader at a London-based law firm explained that for global law firms, this means understanding the regulations not just in their home jurisdiction, but also in the various markets where they have offices and clients. “I think it’s there’s a lot of noise at the minute, and I think there’s quite a challenge to navigate through that noise, particularly for global law firms. We’re advising clients, particularly on the issue and the challenge around regulatory divergence.” The panel also highlighted opportunities for AI to streamline and automate support tasks, such as document processing, transcription and content creation. “This could lead to efficiency gains and free up support staff to focus on more strategic initiatives,” one panelist noted. By taking over these more routine, repetitive tasks, generative AI could drive productivity improvements and allow support and legal personnel to redirect their efforts towards higher-value, strategic work.

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 [1] Microsoft and LinkedIn: 2024 Work Trend Index Annual Report, May 8, 2024